NZX Ltd v Ralec Commodities Pty Ltd - [2014] NZHC 376

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1299 [2014] NZHC 376

BETWEEN NZX LIMITED
Plaintiff/First Counterclaim Defendant

ANDRALEC COMMODITIES PTY LIMITED First Defendant/First Counterclaim Plaintiff

RALEC INTERACTIVE PTY LIMITED Second Defendant/Second Counterclaim Plaintiff

GRANT DAVIS THOMAS Third Defendant

GRANT THOMAS NOMINEES PTY LIMITED
Fourth Defendant

DOMINIC LUKE PYM Fifth Defendant

PYM FAMILY PTY LIMITED Sixth Defendant

NZX HOLDING NO 4 LIMITED Second Counterclaim Defendant

MARK RHYS WELDON Third Counterclaim Defendant

Hearing: 30 January 2014

Counsel: B R Latimour and B M Cash for Plaintiff/Counterclaim
Defendants
T J North SC, J K Scragg and P H Higbee for Defendants/Counterclaim Plaintiffs, together with N Moncrieff from the Victorian Bar

Judgment: 6 March 2014

NZX LIMITED v RALEC COMMODITIES PTY LIMITED [2014] NZHC 376 [6 March 2014]

RESERVED JUDGMENT OF DOBSON J

Contents

NZX application requiring Ralec to complete revised list of discovered documents................... [2] Counterclaim defendants’ application for increased security for costs ...................................... [43] Challenge to NZX’s confidentiality claims .................................................................................... [52] NZX correspondence with Ralec shareholders ............................................................................. [64] Further interlocutory steps............................................................................................................. [72] Costs ................................................................................................................................................. [74]

[1] A range of concerns arising in the interlocutory stages of these proceedings was argued in four applications. The proceedings involve claims by the plaintiff arising out of its purchase of businesses from the defendants, and counterclaims by the defendants for alleged deficiencies by the counterclaim defendants in their post- acquisition operation of the businesses that are said to have compromised the prospects of the defendants earning additional consideration for their sale. In this judgment I will refer to the plaintiff/counterclaim defendants as NZX, and to the defendants/counterclaim plaintiffs as Ralec.

NZX application requiring Ralec to complete revised list of discovered documents

[2] A major change to the scope of discovery obligations was effected by the amendment to the High Court Rules which came into effect on 1 February 2012. The former test, classically referred to as Peruvian Guano, required parties to discover documents that were relevant to issues in the case, and extended to
documents that might lead to a chain of inquiry. 1 The new rules reflect a recognition

that the disproportionate work, and therefore cost, of discovery on the former basis was hampering efficient and proportionate outcomes. The new regime treats the discovery process as substantially different. Parties to litigation are obliged to co-operate and in litigation on a scale such as is involved here there is a presumption for tailored discovery that requires each party to exercise judgement in confining what is discovered to the genuinely material documents, proportionate to the issues
being litigated.

1 Compagnie Financiére et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 (CA).

[3] At the outset of the discovery process, the parties agreed that each side would nominate the categories of documents sought from the other. The lists of categories were filed with the Court attached to a joint memorandum dated 3 October 2012. NZX stipulated 18 categories of documents, together with examples of the type of documents that they would expect…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading NZX Ltd v Ralec Commodities Pty Ltd

Details

AGLC: NZX Ltd v Ralec Commodities Pty Ltd [2014] NZHC 376
Case: [2014] NZHC 376
Decision Date: 6 March 2014

CaseChat Overview and Summary

In the High Court of New Zealand, NZX Limited brought claims against Ralec Commodities Pty Limited for alleged deficiencies in the operation of businesses that NZX had acquired from Ralec. In turn, Ralec filed counterclaims against NZX and others for deficiencies in the post-acquisition operation of the businesses. This judgment addresses four interlocutory applications that arose in the proceedings. The first was an application by NZX that Ralec re-list the documents discovered, which NZX considered had been over-discovered. NZX's claim was that Ralec had failed to confine its discovery to the genuinely material documents, proportionate to the issues being litigated. The Court found that the extent of over-discovery was of sufficient magnitude to warrant an order that Ralec re-list the documents to apply a more focused and narrower test of relevance. The second application was an application by the counterclaim defendants for increased security for costs to reflect substantially higher levels of costs and disbursements incurred in progressing discovery and inspection than had been anticipated at the time of the original application. The Court found that NZX was entitled to an additional sum of $10,000 for costs at the discovery and inspection stage. The third application was a challenge by Ralec to NZX's confidentiality claims. The Court ordered that NZX was to make its confidential documents available to Duncan Cotterill, Messrs North and McGirr, and to Ms Moncrieff, subject to each of those persons providing undertakings to respect the confidentiality constraints imposed on behalf of NZX. The fourth application was an application by Ralec that Bell Gully was to disclose a full list of the recipients of a letter it had written to shareholders in the Ralec companies, and an order prohibiting Bell Gully from any repetition of such communications. The Court found that there was no basis for orders of the type that Ralec sought. The Court granted costs to NZX on the two interlocutory applications pursued successfully on its behalf and ordered that Ralec was entitled to one half of the costs ordinarily applicable to its application of 20 November 2013, together with disbursements incurred in relation to it.

Orders